Ministers and Assistant Ministers for the Department of Industry, Innovation and Science

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Doorstop, Parliament House, Canberra

10 February 2014

Subject: Toyota's decision to end car production

E&OE

IAN MACFARLANE: The announcement today by Toyota Australia that they will be closing production in 2017 is an extraordinarily significant day for Australian industry. Australian industry will never be the same. With this closure it will change the face of industry. But I want to assure the workers at Toyota that firstly, we understand just how difficult the period ahead is going to be and that the government will work with both Toyota but the auto industry in general to make sure we have opportunities for them. And secondly, for those people who are involved in Australian industry, I want to assure them that there is a future for Australian industry, but it will be a different future.

It’ll be a future that we’ve been tracking towards for some time now, but this announcement by Toyota will accelerate that change. We realise that the auto industry has been facing significant challenges in Australia, perhaps for over a decade, and that the announcements made firstly by Ford, then by Holden and now by Toyota are a reflection on a restructuring globally that’s going on and the very competitive nature of the auto industry.

But Australia is built on overcoming adversity, and out of today’s change will come growth in industry, but in a new tack, and the industry can be assured that this government will stand behind it every step of the way. We have an inquiry currently underway, and a fund built around that. Obviously the overall perspective of that inquiry will now be broadened to encompass the Toyota announcement. But can I assure the people at Toyota that we will work very closely with them as they go through this transition leading up to 2017.

JOURNALIST: The government was warned explicitly last year when the Holden decision was pending that if you let Holden go, Toyota would soon follow and in time the components sector would collapse. State government said that, unions said that, Labor said that. Has a bluff been called here against the industry and you’ve lost it?

IAN MACFARLANE: Well I heard the decision at 10 to 4 when Mr Toyoda spoke to me personally, and he had attempted to ring the Prime Minister, but unfortunately the Prime Minister was already going out to engage in a press conference. In terms of Toyota’s future in Australia, I always felt that if we were given the time we could put in place a plan to ensure that Toyota did continue. Its situation was entirely different to that of Holden, and of course to Ford. Toyota was exporting more than half its production, it was involved in a significant cost down exercise where it was trying to reduce the cost of producing a Camry in Australia by about $3000. The government was working through those issues with Toyota. I’d visited the Toyota plant in Nagoya to see first-hand what that plant was doing to maintain its efficiency. And in terms of this decision by Toyota, as they have said, it is their decision and they are appreciative of all the efforts that the government has made in terms of supporting the car industry.

JOURNALIST: (inaudible)…did the government make, was there any offers on the table over the last couple of weeks? What was the support the government was willing to make?

IAN MACFARLANE: Well we hadn’t reached that stage in terms of the process. As everyone understood from the day I was sworn in as the Industry Minister, I said it would be a process where we’d have a Productivity (Commission) inquiry, where we’d then go and look at the recommendations of that Productivity Commission in April/May of this year and then we would make an assessment of where we went in terms of support for the car industry when the current car plan – which I announced in 2003 and began in 2006 – expired.

So the current car plan was operating, what we were working on was where we went from there. Unfortunately time and circumstances have overtaken the car manufacturers and Toyota being the last of them to make this decision.

JOURNALIST: How many of the 45,000 jobs in the automotive manufacturing sector are going to exist by 2017?

IAN MACFARLANE: Well those jobs will obviously exist, but they will be in other fields. I remind you of a number that the Productivity Commission had in their report that 350,000 people are made redundant each year in Australia and they go on and find new jobs. And the challenge for us is to assess which of those in the component industry can transition into a high proportion of export – about a quarter of that industry exports, and they export up to about 40-50 per cent of their production. We need to see how many of those we can transition into full export. And then we need to work to ensure that the transition of those highly skilled people who work in the component and car assembly lines are able to transition into new jobs. But the reality is that Australians have, over time, transitioned into new skills. This will be an accelerated form of that ongoing transition. We acknowledge that, as I say the government is working with the industry on a plan, we will broaden the scope of that plan.

JOURNALIST: Did Toyota ask the government specifically for any financial assistance, or industrial relations or other assistance?

IAN MACFARLANE: Toyota have made no requests to us, other than express their frustration at the difficulty they were having in terms of the industrial relations process, and we made some comments in terms of supporting their attempt to have the changes to the award voted on by the workers in the plant, which was thwarted by union action and court action.

JOURNALIST: I’ve been given to understand that the former government had $200 million on the table for the next generation of Camry. What’s your understanding ? Is that the correct figure?

IAN MACFARLANE: I’m not aware of any sum of money that was available for the next generation of the Camry, which is not due until 2017/18. I was, as I say, in a process, which would have led to the government considering what assistance was necessary, and unfortunately that process has now been curtailed by the Toyota announcement.

JOURNALIST: Are you disappointed Minister that Toyota didn’t wait until a) the end of the Productivity Commission inquiry and b) until the court action, the appeal…(inaudible)

IAN MACFARLANE: Well I am disappointed and as I said, this decision will change the face of industry in Australia forever. But in that I recognise two things: firstly, that Toyota had a business decision they had to make, and secondly that Australia can overcome this adversity as we have in the past, not just in the industry sector, but in the agricultural sector, right across the board. And I’m sure that if we all work together and the government plays its role in assisting in that transition, that we can do that.

JOURNALIST: Does the government accept any culpability for this for not fighting to save Holden?

IAN MACFARLANE: Well I don’t think anyone’s tried harder to save the car industry than I have, remember the current plan is my plan handed down in 2003, so I dismiss that assertion completely.

JOURNALIST: Well your colleagues, your colleagues who opposed you on this?

IAN MACFARLANE: Holden have made an announcement, and GM backed it up, that no amount of money would have changed their decision, so that’s an independent decision. In terms of Toyota, their decision may have been influenced by the decision of Holden not to continue production in Australia. But overall there are many, many factors that are at work in terms of Toyota’s decision, and I’ll allow Mr Toyoda to explain them in detail.

JOURNALIST: Can you speak to one of those factors, and this was cited in the statement from Toyota, free trade agreements that have recently been signed and some that might be signed in the future. On the South Korean free trade agreement was there not enough provisions put in place to protect the car industry?

IAN MACFARLANE: Well my understanding from discussions that both Minister Robb and I had had with Toyota and the Prime Minister had had, Toyota were looking forward to a free trade agreement with Japan which would have significantly lowered the cost of much of their componentry. So look, in the end Toyota will make decisions based on its own analysis of the situation, but there is no doubt that the free trade agreements that are being signed in terms of South Korea, the one we’re working on with Japan, the future ones potentially with China are good for Australia in the long term and are good in terms of opening market access up to jobs for people such as those who will be displaced by the decision by Holden and Ford and now Toyota.

JOURNALIST: As you say, you’ve been a vocal advocate for the car industry back to 2003, this is the second major car maker to announce its exit in the last three months, do days like today, these difficult days, ever give you pause to think and reconsider your position?

IAN MACFARLANE: Look, I am here to make sure that industry is viable and is productive in the long-term, today’s just another challenge in that road for me, it’s a huge moment for industry in Australia and an even bigger moment for those people who will unfortunately lose their jobs as a result of it. But I’ve never walked away from a challenge in all my life and I’m certainly not going to walk away from this challenge.

JOURNALIST: Don’t Victoria and South Australia now face recession?

IAN MACFARLANE: I am confident that managed properly, we can manage this transition. In terms of Holden and Toyota we’re talking about closures which are still three years away. We need to make sure that we do everything we can, that we facilitate new industries, we get rid of costs, we get rid of the carbon tax, we get rid of regulation, we do those things that encourage industry to invest in Australia, and I’m confident we can do that.

JOURNALIST: Is there any prospect of a new plan, a new plan for South Australia and Victoria? I mean, you’ll have to up the ante…

IAN MACFARLANE: I’ve said that we will broaden the auspices of the current review that is going on, but look this is day one of a process that’s probably got three to four months to run. It was always envisaged that the Holden plan would be announced later in the third quarter of this year, we are confident that we can work through that and for the workers at both Holden and Toyota, I re-emphasise that the government is going to stand right behind you all the way.

JOURNALIST: The government went to the election promising a million jobs over five years, is that promise now null and void?

IAN MACFARLANE: I go back to my original statement that redundancies are part and parcel of an evolving industry sector in Australia, and as the PC report pointed out, hundreds of thousands of redundancies are issued each year and Australian workers and Australian industries have moved forward from that point, build on that and put in place more efficient, more competitive industries. I’m confident that will happen with this in the case of Toyota’s closing.

Ministers and Assistant Ministers

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